2004-139 Council Resolution - Laserfiche WebLink

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• • City of Lino Lakes September 20, 2004 Page 5 The City will receive, through the purchase of City owned land, approximately $2,200,000 from the developer at the tim e of closing. It is envisioned that this, in com bination with the Metropolitan Council grant, may be the source of funds need ed to provide the land w rite down. The grant would potentially provide $1,000,000 and the City then would loan $700,000 to the project. The City would anticipate being reim bursed in full through tax increments generated from the district over a 16 year period. Without the grant, a gap of $1,000,0 00 exists in the project. As a possible fall back position, the City may consider increasing its loan to the project through the use of its land sale proceeds. This amount, $1,700,000, would then be reimbursed in full through tax increments generated from the district over a 16 year period. Security There are three primary financing components proposed for this project. These include: a) General Obligation bonds, both TIF and Improvement a. General Obligation bonds will become general obligation of the taxpayers if other sources of revenue are not available to service debt. b) Internal loan — to be reimbursed with tax increm ent a. If tax increment is not available to provide the reim bursement, the City will have little or no recourse to collect its money and repay its internal I oan. c) Developer pay -as- you -go note — to be paid only to the extent tax increme nt is available a. The developer is only paid if there is sufficient tax increm ent to do so. The following measures have been taken to leverage City assistance and maximize its security. 1) Minimum assessment agreements and m inimum value requirements a) The City's security primarily rests upon the construction of buildings w ithin the TIF District, which create taxable value. One of the m ethods of assuring that the value that is projected for the District, is actually constructed and maintained throug hout the life of the District, is to have the developer execute minimum assessment agreements for each parcel. The developer has argued that minimum assessment agreements will be an impediment to development on a site that already will bring some challenges to attracting commercial and housing developers. Staff and Springsted agree tha t specifically the commercial components of the developm ent face stiff competition from nearby sites, even after the provision of assistance to the project. On one hand the City needs development to occur in the TIF District to generate necessary revenue to pay costs, and on the other hand it needs security that such development meets and maintains certain taxable m arket value thresholds. After several negotiation sessions on this issue, we are comfortable recommending the following approach: i) That a minimum value agreement be put in place on the owner - occupied components of the developm ent, with the agreement dropping off proportionately as each individual unit is sold. ii) That a minimum value agreement be put in place on the re ntal components of the development, with the agreement dropping off when a building perm it is issued on the building(s) meeting the value requirements.